Korea Today.zip Nov 7: Korean Investors Pour $2.2 Billion Into US Stocks as Mirae Asset Reports a Hack

South Korea's stock market was closed on Saturday, November 7, but the aftershocks of this week's sell-off kept coming. A Japanese media analysis found that world stock markets lost $3.5 trillion in value in a single day on November 5. Korean retail investors bought about $2.2 billion of US stocks in one week, most of it in a single leveraged chip fund. Mirae Asset Securities, the country's largest brokerage, said hackers had obtained client account numbers and employee data. A stake battle at Hanjin KAL, the holding company of Korean Air, tripled the price of its preferred shares in a week. And a temporary easing of margin-loan rules starts on Monday. Won amounts below are converted at 1,357.20 won per dollar, Woori Bank's November 6 reference rate.

Global stocks lose $3.5 trillion in one day

According to a Japanese media analysis of data from financial data providers, the combined value of the world's listed stocks was $154 trillion on November 5, down $3.5 trillion from the day before. Our own math puts that at about 2.2% of global market value gone in one session, measured against the $157.5 trillion starting level. Stocks listed on the Nasdaq lost about $2.5 trillion of that, the largest one-day drop in value on record. On November 6, Tokyo's Prime market lost another 77 trillion yen.

The Japanese analysis pointed to the US midterm election as the trigger: after Democrats won control of Congress, investors reportedly began to price in tighter rules for AI data centers, and money that had piled into AI and chip stocks was pulled out, the analysis said. Because the Nasdaq accounted for roughly 70% of the global decline, the sell-off looks less like a broad economic scare and more like a sharp exit from one crowded theme. On Friday, the KOSPI fell 6.02% to close at 5,059.69.

Korean retail investors buy $2.2 billion of US stocks

Data from the Korea Securities Depository show that Korean investors were net buyers of $2.198 billion of US stocks from November 2 to 6, or about 2.98 trillion won. That one week beat the whole month of August, when net purchases were $1.962 billion, and was more than double September's $1.001 billion. Compared with October's total of $5.423 billion, the week alone reached about 40.5%.

The buying was concentrated in one product. SOXL, an exchange-traded fund designed to deliver three times the daily move of a US semiconductor index, drew $1.625 billion, or about 74% of the total. That suggests many retail investors were betting on a quick rebound in chip stocks after the crash. Leveraged funds reset every day, so over several days of ups and downs their returns can differ widely from three times the index's return. During the same week, individuals also net bought about 4.2 trillion won (about $3.1 billion) of stocks on Korea's main board.

A leveraged ETF is a fund that aims to multiply the daily return of an index, usually by two or three. Because it rebalances daily, holding it for longer than a day can produce results that are very different from the simple multiple.

Mirae Asset Securities discloses a hack

Mirae Asset Securities said on November 7 that outside attackers targeted its mobile web login service, which uses phone verification, and its internal groupware on November 4 and 5, one day apart. The account numbers of about 3,800 clients leaked, while other details such as account holder names did not, the company said. Personal data of 35,255 current and former employees, including contract staff, also leaked. Most of it was names and employee numbers, but some records included email addresses, phone numbers and encrypted passwords. Resident registration numbers and other unique identifiers were not exposed.

The company said it has found no financial losses so far and that its main systems are running normally. It reported the breach to regulators on the night of November 6 and opened a temporary help desk for affected clients. Four affiliates of the Mirae Asset group, including Mirae Asset Life, have now been targeted by attacks in recent weeks. An account number alone is not enough to move money, but leaked data can be used in phishing calls and texts, and the company urged clients to be careful.

Hanjin KAL preferred shares triple in a stake battle

In a regulatory filing on November 4, Hanjin KAL said its largest shareholder had changed from Chairman Cho Won-tae and 18 related parties, with a 20.58% stake, to Hoban E&C and three related parties, with 20.69%. The gap is just 0.11 percentage point, or 75,134 shares. Hoban, a construction group, has said its stake is held as a simple investment. Cho filed a plan to buy 325,000 common shares at 114,000 won each, or 37.05 billion won (about $27.3 million) in total, with trading to start on December 3.

The share price reaction was largest in the preferred shares. Hanjin KAL's preferred stock rose from 26,200 won on October 30 to 80,600 won on November 6, about 3.08 times, including a 30% daily limit-up move on Friday. The common shares rose 60.0% over the same period, from 122,900 won to 196,700 won. Preferred shares usually carry no voting rights, so they matter little in a control fight. But when few preferred shares are in circulation, even modest buying can push the price sharply higher.

Margin rule relief starts November 9

The government said on November 6 that brokerages will not have to keep the 140% collateral ratio on margin loans for three months starting November 9. Brokers are now setting their own rules. NH Investment & Securities and Mirae Asset Securities will lower the line that triggers forced sales of Korean stocks from 140% to 130%. Korea Investment & Securities will delay forced sales for clients who apply, and Kiwoom Securities will grant a one-day delay on request to accounts whose ratio sits between 130% and 140% at the close.

Here is a simple example. An investor who buys 20 million won of stock with 10 million won of their own money and 10 million won borrowed starts at a 200% ratio. With a 140% line, a forced sale can come once the holding falls below 14 million won, a 30% drop. With a 130% line, it falls to 13 million won, a 35% drop. The waiver does not stop forced sales on its own, so investors still need to check their broker's actual rule.

A forced sale, or margin call liquidation, happens when the value of stocks bought with borrowed money falls so far that the collateral no longer covers the loan, and the broker sells the shares without the investor's consent to recover the money.

Sources: Korea Securities Depository, Mirae Asset Securities, Hanjin KAL, Ministry of Economy and Finance

The bottom line: Korea's market was shut on Saturday, but the global loss of value, the rush into a leveraged chip fund, a major brokerage hack, the Hanjin KAL stake fight and Monday's margin relief all set the stage for next week's trading.